MARKET CURRENTS
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MARKET CURRENTS
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Saturday, May 18
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2:48 PM New home prices in China rose 4.9% from a year ago in April, a faster Y/Y pace than the 3.6% growth witnessed in March. In Beijing and Shanghai, prices rose 10.3% and 8.6% respectively. The data underscore government concerns regarding property inflation and suggest that last month's 13% decline in home sales transaction value was an anomaly tied to developers' rush to supply homes in March ahead of property curbs rather than an indicator that the sector is cooling. On a M/M basis, home prices rose 1% in April. The Chinese Real Estate ETF (TAO) is essentially flat YTD, but up ~43% over 12 months. Comment!
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11:33 AM With Turkish stocks and, by extension, the Turkey ETF (TUR), trading just a shade below all time highs, it's worth looking at the country's fundamentals in the wake of Moody's investment grade blessing (I, II). From WSJ: Debt-to-GDP is just 36% (down 10% in the past three years alone), 2012's budget deficit was a comparatively meager 1.4%, and the country's reliance on foreign currency debt is limited to just 27%. Like the Philippines however, authorities are concerned about the potential for inflows of "hot money": "Investment grade can lead to excessive build up of risk and we may have to look into that," Finance Minister Mehmet Simsek says. 1 Comment
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9:30 AM Nonperforming loans (as a percentage of total loans) are growing in the eurozone periphery by a disconcerting 2.5% per year, JPMorgan says, adding that the problem appears endemic outside the eurozone core as NPLs are 25%, 19%, 13.4%, and 10% in Greece, Ireland, Italy, and Portugal respectively. This raises questions about the impairment capacity of banks and what steps will ultimately be taken to provision against these underperformers. (Also: Spain's banks to reclassify refies, Slovenia NPLs contribute to downgrade, need to be transferred) 2 Comments
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8:40 AM European Economic Commissioner Olli Rehn is tired of being labeled "as an unworthy person who is almost eating children," a rather fantastical characterization he says is improperly applied to anyone pushing the austerity agenda. In reality, Rehn is agnostic when it comes to economic policy and says he finds much to like in Keynes. Now that the crisis has dissipated (at least in terms of periphery yield spreads) Rehn says there is more "room to maneuver" and countries can pursue budget cuts "at a slower pace." Comment!
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